Unformatted text preview: Marketing Plan: CocaCola to Cuba 12/17/15 Final Marketing Plan Lars Anderson, Kelsey Parkin, Austin Barr, Taji Onesirosan Professor Cardona, Global Marketing BUS318 Background CocaCola: CocaCola is a thriving and massive company with over 3,500 products in over 200 countries. The company was founded in 1886 and has been established as the world's largest beverage company comprised of over 500 brands, 20 of those brands being worth over 1 billion dollars. Because of the company's success CocaCola has made it an effort to improve the social well being of many different countries. Some of the countries that CocaCola has been active in are China, Colombia, South Korea, Turkey, and the United Kingdom. The CocaCola Foundation has given a significant amount of money to meet the needs of these countries and also a number of other countries. Some of the ways CocaCola serves these countries is by providing water, education, and disaster relief. CocaCola has a very positive presence in most every country it is current in. Because there are only two countries that the CocaCola brand does not reside, it is our desire to target one of those countries so that we can provide a great product but also so that we can invest into their culture. Potential in target country: With Cuba and North Korea being the only countries that do not sell CocaCola and with the new Cuban relations with the United States, we plan on entering CocaCola in the Cuban market. CocaCola desires to be the first American product to enter into the Cuban Market and we believe the CocaCola brand that has the capability to do so. Because of the worldwide recognition that CocaCola has it is anticipated that the CocaCola products will be well received as CocaCola provides a high quality product. It is assumed that CocaCola will be able to provide beverage products at a lower cost because of their ability to mass produce their product at a low cost, this is a plus for the Cuban Market. Also, because CocaCola is in almost every other country in the world that proves that the CocaCola company knows how to operate in many different cultures, which is clear by their outstanding success and dominance in the beverage industry. It will also be an effort of CocaCola to invest into the Cuban culture where necessary. CocaCola is passionate about giving back to the communities and Cuban is a country that could greatly benefit from the CocaCola company in a number of ways. Launching this product into the Cuban Market will also help in the rebuilding of relations between the United States and Cuba. Potential Challenges: Potential challenges would be the new relationship and acceptance of the American brand in the country. How easy and successful will it be to start selling CocaCola in Cuba? Since CocaCola is a widely well known American based company and Cuba could see our company as a pressing Americanizing company that will change the way they live. Cubans could associate our product/brand with the “American stereotype”. This global opportunity will be a new venture for the brand to enter a country that had prohibited it for so long. We will have to find a new approach to market Coke to this country. If it goes smoothly, this could be a huge profit for the company. II. Economic Analysis Guideline I. Introduction The government continues to lower the socialist economic system to have a more firm political control. Since the Cuban Communist Congress that was held in 2011, the Cuban government has slowly and incrementally implemented limited economic reforms, including allowing Cubans to buy electronic appliances and cellphones, stay in hotels, and buy and sell used cars. As the Cuban government has cut state sector jobs as part of the reform process, it has opened up some retail services to "selfemployment," leading to the rise of socalled "cuentapropistas" or entrepreneurs. Currently, approximately 476,000 Cuban workers are registered as selfemployed. Despite some reforms, the average Cuban's standard of living remains at a lower level than before the collapse of the Soviet Union and the resulting downturn of the 1990s. ( ). II. Population A. Total 1. Growth rates As of 2014, there was an annual growth rate of 0.146 ( ) 3. Birthrates 9.9 births/1,000 population (2015 est.) ( ). B. Distribution of population 1. Age 014 years: 15.96% (male 904,800/female 855,309) 1524 years: 13.29% (male 752,160/female 714,384) 2554 years: 47.16% (male 2,620,536/female 2,581,344) 5564 years: 10.65% (male 562,207/female 612,438) 65 years and over: 12.95% (male 639,515/female 788,740) (2015 est.) ( ) 2. Sex at birth: 1.06 male(s)/female 014 years: 1.06 male(s)/female 1524 years: 1.05 male(s)/female 2554 years: 1.02 male(s)/female 5564 years: 0.92 male(s)/female 65 years and over: 0.81 male(s)/female total population: 0.99 male(s)/female (2015 est.) ( ) 3. Geographic areas (urban, suburban, and rural density and concentration) urban population: 77.1% of total population (2015) rate of urbanization: 0.07% annual rate of change (201015 est.) (
) 4. Migration rates and patterns 3.66 migrant(s)/1,000 population (2015 est.) ( ). 5. Ethnic groups white 64.1%, mestizo 26.6%, black 9.3% (2012 est.) ( ). III. Economic statistics and activity A. Gross national product (GNP or GDP) Image provided by Global Edge 1. Total $128.5 billion (2014 est.) $126.9 billion (2013 est.) $123.5 billion (2012 est.) (
) 2. Rate of growth (real GNP or GDP) 1.3% (2014 est.) 2.7% (2013 est.) 3% (2012 est.) (
) Transportation/ Exports/ Imports/ Further Breakdown Something that is important to know about Cuba’s economy is the amount of imports and exports from other countries and how efficiently goods are able to be spread across the country. Because we are CocaCola this is very crucial information to know as we need a reason to feel that our product/brand can be successful in Cuba. Of course Cuba is just recently becoming more available to the world market with some changes in the politics, our numbers may be a bit skewed, and we would argue that the export and import number will rise with the trades between Cuba and U.S. To know this we need to know how many different airports there are, ports, railways, roadways, waterways, etc. A few major sea ports include Antilla, Cienfuegos, Guantánamo, Havana, Matanzas, Mariel, Nuevitas Bay, and Santiago de Cuba. Cuba ranks 25th in the world in the amount of railways, which is a very good sign to create availability of transporting goods throughout the country. Cuba also ranks 43rd in the world in the amount of airports there are, which is another great sign for expanding Coca Cola into the region (cia.gov). A couple things that definitely need to be highlighted are the amount of exports and imports Cuba’s economy persists of and who they have been trading with. (Trading with Cuba is a recently new opportunity for the US). Imports: $14.7 billion (2014 est.) $14.77 billion (2013 est.) Where they rank in the world: 89 Imports commodities: petroleum, food, machinery and equipment, chemicals Imports partners: Venezuela 38.7%, China 9.8%, Spain 8.4%, Brazil 4.7%, Algeria 4.4% (2014) (cia.gov) Exports: $5.62 billion (2014 est.) $5.566 billion (2013 est.) Where they rank in the world: 112 Exports commodities: petroleum, nickel, medical products, sugar, tobacco, fish, citrus, coffee Exports partners: Venezuela 33.5%, Canada 15.9%, China 9.5%, Netherlands 4.5% (2014) (cia.gov) These numbers represent great opportunity for the US, especially a massive brand like CocaCola that has such an amazing customer base around the world and who has the ability to succeed in just about any country with the world class research and marketing and product representation. Cuba may not be the largest country in the world, but they are a very economically respectable country that CocaCola has not yet penetrated since the trade restrictions. Income Classes As far as income classes goes, Cuba is unique in that they have recently been working towards a more capitalist economy from a more communist type economy. Some individuals are in a position to take great advantage of the switch and then there are also individuals who are not in a good position to take advantage and this is creating great economic inequality (NY Times). This can be chalked up as economic “growing pains” in a way at a microeconomic level as citizens are adapting to the economic changes ( ). This presents another great opportunity for a brand like CocaCola to expand into Cuba and create jobs for locals and help the stretch towards capitalism. More information about economic distribution will be revealed moving forward. Working Conditions 1. Salaries and benefits Minimum Wage:
CUP 225 per month (source: ILO, 2011). Average Wage:
Average monthly gross earnings in Cuba is CUP 440 (USD 19). Social contributions: Social Security Contributions Paid By Employers: Employer's contribution: 14% Social Security Contributions Paid By Employees: Employee's contribution: 0% I. Principal industries The top industries in Cuba are Petroleum, Nickel/Cobalt, Pharmaceuticals, and Tobacco. 1. What proportion of the GNP does each industry contribute? Services contribute the largest portion to the country's GDP followed by industry, a distant second, then manufacturing, and finally agriculture. According to The Federation of International Trade Associations the Cuban economy is extremely dependent on tourism (services) and raw materials. Image provided by Global Edge J. Foreign investment 1. Major exports According to Global Edge the major exports of Cuba are Pharmaceuticals, and Tobacco. Image provided by The Federation of International Trade Association Image provided by The Federation of International Trade Association a. Dollar value The dollar value of Exports of Goods most recently is about $6.2 million as of 2013. The dollar value of Exports as of 2013 is about $12.4 million, reaffirming the reliance Cuba has on the service industry. b. Trends According to the graph above, the imports and exports of Cuba have in general been increasing over the last 5 years, demonstrating a growing economy. 2. Major imports Image provided by Global Edge Image provided by The Federation of International Trade Association a. Dollar value Total dollar value of goods and services as of 2013 in Cuba is over $15.6 million. b. Trends Trends in regards to imports can be identified in the image above. From 2010 to 2011 there was a significant increase in imports which have since stayed rather consistent around the upper $15 million range since the dramatic increase in 2010. 3. Balanceofpayments situation The balance of payments is the difference in the total value between payments into and out of a country over a period. In the case of Cuba their BoP as of 2011 is $110 million. a. Surplus or deficit? According to the provided graph there is a surplus of $110 million. They are receiving more payments into their country than they are paying out of the country. 4. Exchange rates Image provided by xe.com L. Trade restrictions writing guide 1. Embargoes There is an embargo in place between the United States that was established in 1960. Within the last few months President Obama and Cuban President Raul Castro have agreed to lift them embargo between the two countries. For the embargo to actually be lifted an act of the United States Congress is necessary ( ). 2. Quotas There is no quota system in Cuba. The importation process is heavily controlled by the state. All the purchases of merchandise and services from abroad have to get the approval of the Central Bank Currency Approval Committee (CAD). (T
he Federation of International Trade Association) 3. Import taxes Average rate for customs tax, 21.3% (2006) Average rate for agricultural products 37% Average rate for other products 9.4% Merchandise coming from WTO members the import tax is 10.8% N. Labor force Image provided by Global Edge 1. Size The size of the total labor force is over 5.3 million. 2. Unemployment rates Image provided by The Federation of International Trade Association O. Inflation rates writing guide Due to Cuba being a communist country there is some information that is unavailable, one of those pieces of information being the inflation rate. IV. Developments in science and technology Due to the repressed status of the Cuba the country is, as a whole, lagging behind most other countries when it comes to science and technology. V.
Channels of distribution (macro analysis) This section is focusing on how we will get our products to the consumers of Cuba. To figure this out we will look for potential distributors for our company in the foreign market. This will allow us to understand if we will have enough business to make a profit from shipping our product to a new country ( ). A. Retailers In this section we want to find the retailer structure within Cuba. In our research we found that competing products are distributed in local and major cities through convenient stores, gas stations, grocery stores and other means of distributing soft drinks ( ).. 1. Number of retailers There are not many privately ran retailers in Cuba. This country is a socialist country where the government has control of production, distribution and exchange of products. 2. Typical size of retail outlets The typical size of a retail outlet in Cuba is very small compared to the rest of the world. In the higher populated cities of Cuba, you may see little stores on the side of the road. 3. Customary markup for various classes of goods Markups for soft drinks are very high for soft drinks. The markups can be between 300600 percent. This means that restaurants and other distributors of pop can buy bulk and only spending nickels for 12 ounces. Then these same places can sell it for over two dollars. 4. Methods of operation (cash/credit) Cuba is not the best place to use credit cards because they have few tolerance of different credit cards. For instance master card was not accepted in Cuba. However, Visa cards are accepted in this country but is charged a 2.5% foreign transaction charge. It was a myth for a long time that Cuba had a 11% plus charge when using credit cards but that didn’t hold for a long time as foreigners did more business with their retailers. ATMs will not accept american based bank credit cards. 5. Scale of operation (large/small) Compared to other countries Cuba has a very small scale operation overall. Cuba is the 136th largest exporter in the world. 6. Role of chain stores, department stores, and specialty shops The role of chain stores, department stores and specialty shops is to obey the government policies and to supply the community with their specific products. B. Wholesale middlemen writing guide It is an important aspect to know the wholesale middle men of a market because they play a vital role in the distribution of products. We are looking to see that the wholesale middlemen are able to get our products to the retailers adequately to distribute our product. 1. Number and size Just as the number of retailers in Cuba there are very few wholesalers in Cuba due to the socialist government who are controlling the distribution. 2. Customary markup for various classes of goods As stated before, sota has the one of the highest markups, even in this stage of distribution. The price at which it is bought is much lower than the price of how much it is sold for. 3. Method of operation (cash/credit) The same rules apply to wholesale middlemen in Cuba as is does to retailers. They do not tend to take foreign credit from businesses but they will still due business. They may charge extra by having a plus charge for the transactions. Cash is the best way to deal with Cuban wholesalers and not use credit cards. We see this in the way that other foreign companies do business in their markets. C. Import/export agents A very important aspect to keep in mind when importing goods into Cuba is to achieve joint ventures that have a permit to import particular items into the country. To receive a permit, importers and exporters need to appoint an agent who will be able to get a license that will allow the company to receive and send goods; although these agents will not be able to distribute the products. In order to get the items in the country they will have to pass through customs regulations. Our company will have to obtain correct documentation because that is a crucial step to get the products into Cuba. Exports from Cuba have to go through the same process but since they rely so much on exports to boost their economy, the process is much more relaxed compared to getting materials into Cuba. D. Warehousing To warehouse our items we will have to rent out a warehouse space or buy one of our own for this is crucial to distribute our products. Without a warehouse we could not have option to distribute to retailers in a timely manner and resort to shipping products directly. This would be a mistake and harder to manage our time and resources. E. Penetration of urban and rural markets writing guide By looking at a population map of Cuba we can tell that there are many rural spot with very few people to go purchase our goods. CocaCola will be looking to distribute to the major cities across the country instead of hitting every gas station or retailer that would buy our products. Our product is more for a city with higher traffic than a city with very few population of people. We’ve came decided that there are eleven quality cities with a high population to make our profits worth the cost to distribute to those cities. VI. Media This section will look at all the means of media in Cuba to detect how our company can advertise in this country. A. Availability of media All media is strictly censored by the Cuban government. This means that the information and opinions in the media is severely bias and restricted. Our company will have to create content that the government would deem to be socially valuable, and free from concerning for high ratings or commercial success. It wasn’t until four years ago that Cuba allowed for American advertising to be included in their media. B. Costs This section will deliver the costs of the given media in Cuba. From our research we found that advertising is heavily ran by the government. 1. Television Television advertising is nearly impossible for foreign companies due to the high state regulations on what is aired. The commercials that are aired on TV are local company advertisements that promote Cuban products. The state is very intentional on what the public views. The government charges foreign companies much higher fees than they do for firms in Cuba. 2. Radio Radio is the primary source of advertising we see fit to our company. Cuba has let foreign companies promote themselves on radio ever since 1985 when Ronald Reagan the Radio Broadcasting to Cuba Act. This allowed for America to have a voice in Cuba through the radio and continue to resolve tensions between the countries. This also includes very low cost to promote product because we would be working with a station that is dedicated to foreign voices. 3. Print The largest newspaper in Cuba is called the “Granma”, which was founded in 1965 to serve for the official news organ for the communist party. The next two biggest newspapers in the country are called the Juventud Rebelde and Tradbajadores. Many other newspapers are published in Cuba but are primarily local for the fourteen different provinces on the island. The cost for advertising in the local newspapers are much lower than the more popular newspapers and would have less restrictions. Our company would much rather market our ads in these smaller papers. 4. Other media (cinema, outdoor, etc.) Just as the other forms of media and advertising, the state has total control. However this is outdoor advertising is not as heavily restrict...
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